Insights 
VT 
USD/JPY Forecast Updates
In the short-term, the USD was forecasted to “edge lower and test 151.20” but showed a sharper decline than expected, reaching a low of 150.88 and closing at 151.04 (-0.52%). While further decline toward 150.20 is possible, breaking below this level may be challenging without increased momentum. Maintaining a downward trend requires that the USD does not exceed 151.55, with minor resistance at 151.25.
Over a 1-3 week period, the current price activity is expected to continue as part of a range-trading phase between 149.50 and 153.00. This analysis has been reinforced by the FXStreet Insights Team, which comprises journalists and experts who curate market observations and insights from various analysts.
Our immediate bias for USD/JPY is to the downside, with a potential decline toward the 150.20 level. This view is reinforced by last week’s soft US retail sales data, which showed only a 0.2% increase for September 2025, missing expectations. We will maintain this downward view as long as the pair stays below the 151.55 resistance.
Trading Strategies for USD/JPY
To position for this move, traders could consider buying short-dated put options with strike prices around 151.00 or 150.50. An expiry in late October or early November 2025 would directly target this expected dip. This approach offers a defined-risk way to capitalize on the anticipated near-term weakness.
Looking beyond the immediate dip, we see these movements as the start of a new trading range, likely between 149.50 and 153.00. This is reminiscent of the volatility we saw back in 2022 and 2024, where Japanese authorities became highly sensitive around these levels. With the Fed signaling a potential pause and the Bank of Japan under pressure from domestic inflation holding at 2.8%, the explosive upward trend appears to have stalled.
Once the pair settles, derivative traders might consider strategies that benefit from this range-bound action. Selling an iron condor with strikes placed outside the 149.50 and 153.00 levels could be effective for the coming months. This strategy would profit from time decay as long as USD/JPY remains within this newly established channel.
